2014 (7) TMI 153 - HC - VAT and Sales Tax

Imposition of penalty under Section 53(12) - attempt to evasion of tax - Tribunal reduced penalty to nominal amount - Held that - no discretion is vested in the authority or the Appellate Tribunal to either impose less or reduce the penalty less than double the amount of tax leviable under the provision. Having regard to the language employed in this provision it is clear that the provision is mandatory in nature and no discretion is vested with the Commercial Tax Officer or the Appellate Tribunal to levy less or reduce penalty under this provision - Tribunal has committed a serious error in modifying the order of the Joint Commissioner of Commercial Taxes which had imposed only the minimum penalty payable under the provision and in reducing the same - Decided in favour of Revenue.

Summary

Issues:
Reduction of penalty imposed under Section 53(12) of KVAT Act by Tribunal.

Analysis:
The High Court considered a revision petition challenging the Tribunal's decision to reduce a penalty imposed under Section 53(12) of the Karnataka Value Added Tax (KVAT) Act. The case involved the interception of a goods vehicle where required documents were not produced, leading to the imposition of a penalty of Rs. 1,04,113 by the authorities. The assessee appealed to the Tribunal, which acknowledged the offense but reduced the penalty to Rs. 10,000 citing lack of clear intention to evade taxes. The High Court referred to previous judgments, including State of Karnataka v. Camellia Clothing Ltd. and State of Karnataka v. D-M-E Co. (India) (P.) Ltd., emphasizing that the minimum penalty under the provision is not less than double the amount of tax leviable. The Court held that the Tribunal erred in reducing the penalty below the prescribed minimum, stating that no discretion is allowed to impose a penalty less than double the tax payable. Consequently, the High Court allowed the petition, setting aside the Tribunal's order and restoring the original penalty imposed by the lower Appellate Authority.

This judgment highlights the strict interpretation of penalty provisions under the KVAT Act, emphasizing the mandatory nature of minimum penalties and the lack of discretion to reduce penalties below the prescribed limits. The Court's reliance on previous decisions establishes a consistent approach in upholding the statutory requirements for penalty imposition. The case serves as a reminder of the legal principles governing tax penalties and the importance of adhering to statutory provisions without deviating from the prescribed limits. The decision reaffirms the significance of upholding tax compliance and deterrence of tax evasion through the enforcement of penalties in accordance with the law.